MMND claims her family is financially independent. Her husband works part-time, which covers their current expenses, but does so because he chooses to, not because he needs to.
There are many numbers on MMNDs website, but they are scattered; it's difficult to see the whole picture.
On reading the different pieces, they didn't quite seem to add up to me. Last night I got curious enough to start gathering all the pieces.
QUESTION:
Is the MMND familiy financially independent by traditional finanacial guidelines?
DATA AND SOURCES:
From the prospectus: FundX Upgrader 2007 year-end total return is 15.06%. From their site: YTD returns as of 1/31/08 are -9.31%.
From an ER Forum post: planned spending of $89,000 / year until 2025, then less. They spend less than that now. MDND (MillionaireDaddyNextDoor) still works part-time, which covers their expenses.
http://www.early-retirement.org/forums/showpost.php?p=607210&postcount=28
Housing expenses: $1,295 / month rent plus $250 / month utilities = $1,545 / month = $18,540 / year.
Millionaire Mommy Next Door: How I Bring My Dreams To Fruition
Budget: They spend almost as much on food as on housing. They budget $18,000 / year for travel, recreation, and entertainment. Minimum yearly budget: $18,540 housing + $16,000 food (guesstimate) + $18,000 travel/recreation/entertainment = $52,540.
Millionaire Mommy Next Door: We Live the Good Life, Not the Goods Life
MMND December Portfolio. Looks similar to FundX Upgrader.
http://millionairemommynextdoor.blogspot.com/2007/12/my-investment-portfolio-revealed.html
MMND Portfolio returns 2007 YTD as of 10/31/07. Up 28.05%, which is $258,563.
http://millionairemommynextdoor.blogspot.com/2007/11/my-investment-portfolio-has-been-kickin.html
MMND 2007 year-end results. Up 14.3%.
http://millionairemommynextdoor.blogspot.com/2008/02/my-2007-investment-portfolio.html
MMND Net Worth. At end of October 2007, $1,583,476. See website for detailed breakdown (table won't format properly here.)
http://www.networthiq.com/people/MillionaireMommy
CALCULATIONS:
As of 10/31/07, MMNDs portfolio was up 28.05%, which is $258,563. Therefore, her starting portfolio was:
$258,563 / 0.2805 = $921,793
And her portfolio as of 10/31/07 was:
$921,793 + $258,563 = $1,180,356
ANALYSIS:
First, MMND would have done slightly better simply by buying the FundX Upgrader fund.
Second, a 14.3% return for 2007 is excellent, beating just about any benchmark or combination of benchmarks you care to name.
Third, her 10/31/07 reported numbers do not match her 10/31/07 net worth statement. Taking only stocks, bonds, and retirement as portfolio = $936,547 + $29,335 + $359,594 = 1,325,476. I don’t know how to reconcile the difference. For now, I’ll continue to use her 10/31/07 reported numbers as a basis for the portfolio.
Fourth, in the months of November and December, her portfolio lost 13.75% (28.05% - 14.3%). This equates to $258,563 * (13.75 / 28.05) = $126,747.
Fifth, assuming that her 1/08 results were similar to FundX Upgrader, her portfolio would be ($1,180,356 – 126,747) * 0.9069 = $955,518.
Sixth, using the traditional 4% SWR, they could withdraw $955,518 * 0.04 = $38,221 per year.
Seventh, assuming that no part of their non-portfolio net worth changed, their NW at the end of 1/08 would be $1,583,476 – ($1,180,356 - $955,518) = $1,358,638.
Eighth, taking out $18,000 cars and $19,000 personal property, their total possible investment portfolio is $1,321,638, which would support a 4% SWR of $52,866.
CONCLUSION:
By traditional withdrawal guidelines, the MMND family is at best barely financially independent, and most likely not financially independent, certainly not spending $89,000 annually. MDND had better keep working, or the MMND family is likely to run out of retirement money.
There are many numbers on MMNDs website, but they are scattered; it's difficult to see the whole picture.
On reading the different pieces, they didn't quite seem to add up to me. Last night I got curious enough to start gathering all the pieces.
QUESTION:
Is the MMND familiy financially independent by traditional finanacial guidelines?
DATA AND SOURCES:
From the prospectus: FundX Upgrader 2007 year-end total return is 15.06%. From their site: YTD returns as of 1/31/08 are -9.31%.
From an ER Forum post: planned spending of $89,000 / year until 2025, then less. They spend less than that now. MDND (MillionaireDaddyNextDoor) still works part-time, which covers their expenses.
http://www.early-retirement.org/forums/showpost.php?p=607210&postcount=28
Housing expenses: $1,295 / month rent plus $250 / month utilities = $1,545 / month = $18,540 / year.
Millionaire Mommy Next Door: How I Bring My Dreams To Fruition
Budget: They spend almost as much on food as on housing. They budget $18,000 / year for travel, recreation, and entertainment. Minimum yearly budget: $18,540 housing + $16,000 food (guesstimate) + $18,000 travel/recreation/entertainment = $52,540.
Millionaire Mommy Next Door: We Live the Good Life, Not the Goods Life
MMND December Portfolio. Looks similar to FundX Upgrader.
http://millionairemommynextdoor.blogspot.com/2007/12/my-investment-portfolio-revealed.html
MMND Portfolio returns 2007 YTD as of 10/31/07. Up 28.05%, which is $258,563.
http://millionairemommynextdoor.blogspot.com/2007/11/my-investment-portfolio-has-been-kickin.html
MMND 2007 year-end results. Up 14.3%.
http://millionairemommynextdoor.blogspot.com/2008/02/my-2007-investment-portfolio.html
MMND Net Worth. At end of October 2007, $1,583,476. See website for detailed breakdown (table won't format properly here.)
http://www.networthiq.com/people/MillionaireMommy
CALCULATIONS:
As of 10/31/07, MMNDs portfolio was up 28.05%, which is $258,563. Therefore, her starting portfolio was:
$258,563 / 0.2805 = $921,793
And her portfolio as of 10/31/07 was:
$921,793 + $258,563 = $1,180,356
ANALYSIS:
First, MMND would have done slightly better simply by buying the FundX Upgrader fund.
Second, a 14.3% return for 2007 is excellent, beating just about any benchmark or combination of benchmarks you care to name.
Third, her 10/31/07 reported numbers do not match her 10/31/07 net worth statement. Taking only stocks, bonds, and retirement as portfolio = $936,547 + $29,335 + $359,594 = 1,325,476. I don’t know how to reconcile the difference. For now, I’ll continue to use her 10/31/07 reported numbers as a basis for the portfolio.
Fourth, in the months of November and December, her portfolio lost 13.75% (28.05% - 14.3%). This equates to $258,563 * (13.75 / 28.05) = $126,747.
Fifth, assuming that her 1/08 results were similar to FundX Upgrader, her portfolio would be ($1,180,356 – 126,747) * 0.9069 = $955,518.
Sixth, using the traditional 4% SWR, they could withdraw $955,518 * 0.04 = $38,221 per year.
Seventh, assuming that no part of their non-portfolio net worth changed, their NW at the end of 1/08 would be $1,583,476 – ($1,180,356 - $955,518) = $1,358,638.
Eighth, taking out $18,000 cars and $19,000 personal property, their total possible investment portfolio is $1,321,638, which would support a 4% SWR of $52,866.
CONCLUSION:
By traditional withdrawal guidelines, the MMND family is at best barely financially independent, and most likely not financially independent, certainly not spending $89,000 annually. MDND had better keep working, or the MMND family is likely to run out of retirement money.